Correlation Between Cibl and Teijin
Can any of the company-specific risk be diversified away by investing in both Cibl and Teijin at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cibl and Teijin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cibl Inc and Teijin, you can compare the effects of market volatilities on Cibl and Teijin and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cibl with a short position of Teijin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cibl and Teijin.
Diversification Opportunities for Cibl and Teijin
Excellent diversification
The 3 months correlation between Cibl and Teijin is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Cibl Inc and Teijin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teijin and Cibl is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cibl Inc are associated (or correlated) with Teijin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teijin has no effect on the direction of Cibl i.e., Cibl and Teijin go up and down completely randomly.
Pair Corralation between Cibl and Teijin
Given the investment horizon of 90 days Cibl Inc is expected to generate 0.5 times more return on investment than Teijin. However, Cibl Inc is 2.01 times less risky than Teijin. It trades about 0.03 of its potential returns per unit of risk. Teijin is currently generating about 0.0 per unit of risk. If you would invest 177,500 in Cibl Inc on August 27, 2024 and sell it today you would earn a total of 22,500 from holding Cibl Inc or generate 12.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 84.4% |
| Values | Daily Returns |
Cibl Inc vs. Teijin
Performance |
| Timeline |
| Cibl Inc |
| Teijin |
Cibl and Teijin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cibl and Teijin
The main advantage of trading using opposite Cibl and Teijin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cibl position performs unexpectedly, Teijin can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Teijin will offset losses from the drop in Teijin's long position.The idea behind Cibl Inc and Teijin pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Teijin vs. Toray Industries ADR | Teijin vs. Nitto Denko Corp | Teijin vs. NSK Ltd ADR | Teijin vs. Secom Co Ltd |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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